In Official Committee on Unsecured Creditors of Great Lakes Quick Lube LP v. John Theisen (2018AP333), the Court of Appeals District I held that the fraudulent transfer statute of limitations begins when plaintiffs could reasonably have discovered the fraudulent nature of the transfer, rather than when the transfer itself occurred.

The instant state case arises from a federal bankruptcy case between the plaintiff creditors of Great Lakes Quick Lube and the debtors who sold their oil change businesses to Great Lakes Quick Lube. The creditors alleged fraudulent transfer against the sellers, but the sellers argued the claims were barred under the one-year statute of limitations for fraudulent transfer in Wis. Stat. § 893.425.

The court sided with the creditors in this case, holding that plaintiffs must file fraudulent transfer actions within one year after the fraudulent transfer could reasonably been discovered. The court rejected the sellers’ reading of the statute that the clock begins one year after the transfer itself. The decision cited cases in other states that ruled similarly on the Uniform Fraudulent Transfer Act.

Since the plaintiffs in this case could not reasonably have discovered the fraudulent nature of the debtors’ transfer more than one year before the date the instant action was initiated, the court dismissed the debtors’ motion for summary judgement and remanded the case to circuit court for further proceedings.